The Problem with New Farm Bills of Modi’s India, 2020

To understand why farmers are protesting, we gotta understand what’s wrong with the farm bills and that’s what we shall be doing in this article….

Let’s start with an overview of the farm bills….

THE FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) BILL 2020 OR THE MARKET PLACE LAW

Article 19 1(g) of the Indian Constitution gives every citizen Fundamental Rights “to practise any profession, or to carry on any occupation, trade or business”. Basically, it means one can sell one’s service or product to anyone, to a private company, to a Government Office, to a Foreign Firm or maybe even to one’s own shop/company/start-up or online. But under the APCM system, farmers can sell their produce only to the respective Mandis of the region. Selling their products to anyone else is illegal and can put them behind the bars. A Parliamentary Standing Committee that had members from different political parties, a few days back came to a conclusion that Mandis were a hotbed of corruption, monopoly and undue deduction of taxes. It further added that these Mandis were not acting in the benefit of the Farmers. In fact, even Congress’s 2019 election manifesto promises to repeal the Mandis….

The current bill is supposed to give the Farmer his Fundamental Right and now the farmer can LEGALLY sell his produce anywhere and not just in the APMC approved mandis or market places….

THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES BILL 2020 OR THE CONTRACT FARMING LAW

This law basically allows the farmers to make Future Contracts and Written Contracts in advance with retailers, factory owners or large corporates. So suppose McDonald’s wants Tomatoes of a specific size or say Lays wants Potatoes of a specific species or say ITC wants Wheat of a specific species before they had to go to Mandi and deal with these middlemen, pay illegal commissions and get their hands on produce. Legal taxes are itself up to 6%….

Now, these companies can deal directly with the farmers. These mid taxes will be saved and part of it will come as a profit to the farmers and also to the end buyers. These simplified supply chains will fast-track the trades and would come out as increased Ease of Doing Business. In fact, now the farmer can make contracts to get a fixed decided amount for his produce even before sowing the seeds. This is supposed to give him safety and assurance while he sets up crops for the next season….

THE ESSENTIAL COMMODITIES (AMENDMENT) BILL 2020 OR ESSENTIAL COMMODITIES AMENDMENT

The Essential Commodities Act has its roots in British India. The Act basically lets the government control the production, supply and the distribution of certain commodities that are known to be essential. The basics of these acts were indirectly used by Winston Churchill to shift grains from India to Britain to suffice requirements of the British Army during WW2. Suppose a commodity comes under this Act, for instance, a food item or an important drug then companies and supermarkets cannot hoard these items when there is a shortage, they also cannot artificially increase the prices etc. the list of essential commodities as per the original act includes Drugs, Fertilizers, Foodstuff, hank yarn made wholly from cotton, petroleum and petroleum products, raw jute and jute textiles, seeds (food crops, fruits and vegetables, cattle fodder and jute seeds). This law was important when India was an agriculture intensive country. The demand was huge but the supply was less. Post Green Revolution, most farmers were subsidised to produce these essential crops. They produce so much of these crops that India produces over 3x of its requirements and has over 2x the required amount of grains as safe stocks. These grains keep rotting in FCI godowns and were in fact used to produce industrial-grade alcohol for sanitizer and similar stuff during the Pandemic. On the other end of the chain what happened before was suppose a biscuit manufacturer or chips manufacturer wants to bulk buy raw materials to keep costs low. He could not do it because storing over a certain limit can put him behind the bars. Not only this, keeping these crops over a certain limit in cold storages could put them in jail. Thus a simple thing like cold storage becomes a high-risk job and thus very less cold storages exist which is why farmers are always in a hurry to sell their produce. In case they can’t find a good buyer they anyhow have to sell the produce at low prices because they can’t store it….

The new amendment has removed foodstuffs such as potato, cereals, pulses, edible oilseeds and oils, from the list of essential commodities which means unless there is a dire circumstance like a war or famine or an extraordinary price rise these commodities will not be considered under the essential commodities list. The government will not impose a stock limit i.e. it cannot stop a supermarket chain or a retailer from hoarding unless there is a 100% increase in the price of perishable goods or 50% increase in the price of non-perishable goods….

This will thus allow bulk buying and increase the profitability of agriculture-based industries. Also, the increase in cold storages, will reduce the costs for storing the produce for farmers and will thus supposedly giving them time for better deals….

Now, let us discuss the problems with these….

The problems they are targetting are real problems. It’s the same case with Demonetisation and CAA-NRC…. But instead of fixing those problems, they replaced with new ones but this time the folks making a profit were their business partners or they themselves….

Coming to storing, yes the weird storage laws are a bit problematic and a lot outdated. But simply allowing companies to store products without proper regulations with end up in larger companies hoarding products and controlling or even manipulating prices….

Coming to contract farming. Yes, it sounds great on paper and will benefit some. But even here, the companies will have lotta more power in controlling prices than the farmers. Also, no company will contract with smaller farmers, hence the poor will simply keep getting poorer….

Coming to farmers being able to sell their products anywhere, they don’t have much of a choice since most markets are controlled by corporations [already most of which is owned by the Ambani Adani groups]. They’ll really be limited to the local markets. This once again will benefit very few but keep most of the folks out of it…

These laws can only work for the farmers benefit if there were complementary regulatory laws to protect them against large corporations. But the benefit of the farmers ain’t really the goal from the beginning. The Modi government is simply handing more power to its business partners in gourmet dishes….

The funny thing is, instead of drawing inspiration from India’s quite good poultry systems, they drew inspirations from the farming laws which failed to produce good results in US…